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UNIT 21 Study Guide - a.i Low Contribution Margin a.ii...

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UNIT 21 1) Operating leverage = Contribution margin/profit 2) Use the operation leverage factor to determine the percentage change in profit for any percentage change in sales volume % profit change= % Sales change x leverage 3) Cost Structure and its effect on profit as volume changes: a. •High Variable Costs as a percentage of Sales
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Unformatted text preview: a.i. Low Contribution Margin a.ii. •Low Operating Leverage a.iii. •As sales volume changes, profit changes slowly b. •Low Variable Costs as a percentage of Sales b.i. •High Contribution Margin b.ii. •High Operating Leverage b.iii. As sales volume changes, profit changes very quickly...
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